UK budget outlines pension boost, energy rebate and tax changes for banks and gambling firms

Chancellor John Healey presented a budget that includes a £100 energy rebate for households in council tax bands A-D, with payments starting in January in England and similar funding allocated to other parts of the UK. The state pension will rise to £13,036 in April, and a new matching personal allowance will ensure pensioners' income is tax-free up to that level.

Young entrepreneurs in England will receive a new allowance to support living costs during the first year of their business, and small alcohol producers such as independent cider makers and brewers will benefit from expanded tax reliefs and a rule requiring tied pubs in England and Wales to offer guest beers. Electric-vehicle drivers using lower-powered public chargers will receive subsidies worth £100 million, translating to an estimated annual saving of £150 for those without home charging.

First-time buyers with deposits as low as 2.5% can access the Your First Home scheme for new-build properties, available to households earning up to £140,000 in London and £110,000 elsewhere in England. Cash ISA allowances for savers under 65 will remain unchanged, and a forthcoming incentive aims to encourage first-time investors in stocks and shares. Self-employed fathers will become eligible for two weeks of paternity pay, worth up to £194 per week, from April 2029.

The budget also introduces a temporary increase in the bank corporation tax surcharge, raising it from 3% to 6% for 15 months, which will generate an additional £1.5 billion for the Treasury. Tax on slot-machine machines in betting shops will rise from 20% to 25% starting in April 2027.

Student loan repayment thresholds will be frozen from next April, and savers with non-ISA cash holdings will face higher tax rates on interest, with basic-rate taxpayers paying 24%, higher-rate 44% and additional-rate 49% on returns above their tax-free allowance. Property income taxes for buy-to-let landlords will also increase, and the Office for Budget Responsibility warned that higher landlord taxes could push rents up and discourage new investment.

The budget excludes the £100 energy rebate for families in council tax bands E and above, affecting about 1.4 million of the poorest households, according to the Resolution Foundation. It also removes the biodiversity net gain requirement for brownfield sites up to 1.5 hectares in England, limiting mandatory nature-creation measures for smaller developments.